Op-Ed: $15 Minimum Wage is an Economic Necessity for Working New Jerseyans

As income inequality grows, fewer people earn enough to afford basic daily needs. That doesn’t just hurt them; it also hurts local businesses

Brandon McKoy

While New Jersey has crawled out of the Great Recession, the gap between working people and the wealthiest in the state continues to widen — with damaging effects for a great number of our friends and neighbors. Even though unemployment rates have dropped in recent years, poverty rates continue to be stubbornly high, indicating that while more people are working hard, they aren’t earning enough to make ends meet. It’s a series of problems that has harmed the health of our workforce and economy; swiftly addressing them is essential to improving the long-term strength of our state.

Fortunately, Gov.-elect Murphy and legislative leaders are committed to tackling economic inequality, in part by increasing the minimum wage to $15 per hour. As always, talk of increasing the minimum wage draws opponents out of the woodwork to claim that such a move would destroy our economy. While these Chicken-Little claims have been proven wrong over and over, it’s worth explaining exactly why New Jersey needs a $15 minimum wage and exactly how it will improve the state’s economy — not kill it.

It’s important to understand just how far behind New Jersey’s working families have fallen. While the unemployment rate has dropped from its height of nearly 10 percent in 2010 to about 4.5 percent today, the rate of poverty and number of residents who rely on food stamps and other benefits remain significantly higher than they were prior to the recession. In other words, while people have been able to find work, too few are earning enough to live independently and afford basic needs, showing that wages haven’t grown sufficiently for too many workers.

The minimum wage for 2018 will rise modestly to $8.60 per hour, which translates to just $17,888 assuming a full-time worker who doesn’t take a day off. That’s a poverty wage and less than half of the $39,393 a year it takes for a single worker to just get by in high-cost New Jersey. About one in four New Jersey workers make less than $15 per hour, which equals less than about $31,200 per year assuming full-time work. It’s no wonder that reports show that a third of New Jersey households can’t meet their basic needs of food, shelter and getting to work, forcing them to rely on public programs and private charity to make ends meet.

Low-wage employers cite negative consequences

While low-wage employers oppose efforts to raise the minimum wage, citing big negative consequences for their businesses, the fact that so many of their workers don’t make enough to afford the products and services they’re offering is a more pressing concern. As income inequality grows, fewer and fewer people make enough to afford basic daily needs, which hurts local businesses that are deprived of would-be customers. Increasing the wage to a level that helps workers meet their needs means that they will spend that money immediately and locally, benefiting small businesses across the state.

And taxpayers should realize that increasing the minimum wage will lead to better use of their money. Right now, some large corporations exploit having their low wages subsidized by taxpayers, who must pay for these low-paid workers’ use of public benefits. A report by UC Berkeley shows that New Jersey spends $726 million in taxpayer dollars each year for public benefits for full-time workers who aren’t being paid enough to afford basic necessities. Making sure that corporations pay their workers a fairer wage will reduce the number of workers that rely on public assistance to get by, thereby freeing those tax dollars for other uses.

Finally, we should rely on history and the evidence from other places that have raised the minimum wage. While the business lobby would like for you to believe otherwise, Seattle has benefited significantly from higher wages, with unemployment reaching an all-time low of 2.6 percent in April and economic activity increasing as more people are able to meet basic needs. We’ve also seen the benefits for ourselves right here in New Jersey; the last time we increased the minimum wage through the ballot, opponents claimed we would lose 30,000 jobs; instead, we gained 90,000.

Ultimately, raising the wage is about giving people a chance to provide for themselves and their families. We can’t be surprised when people aren’t involved in their community or aren’t able to spend time with their families when they have to work two or three jobs just to put food on the table and keep a roof over their heads. We all benefit when we have more New Jerseyans who can contribute to their communities and take care of their families. It’s time to move toward a stronger, more prosperous state. It’s time to raise the wage.

Brandon McKoy is a policy analyst at New Jersey Policy Perspective, which drives policy change to advance economic justice and prosperity for all New Jerseyans through evidence-based, independent research, analysis, and advocacy. He is a member of Gov.-elect Murphy's transition2018 team; the views expressed here solely reflect his views as an NJPP staff member and do not in any way reflect the Transition2018 team.